![]() Investors who are stuck paying a higher long-term capital gains tax could be put in a difficult position next tax season. Capital Gains Tax Rate Increases & Opportunity ZonesĪlthough there is still uncertainty about the effective date the tax rate would be implemented, it appears if the legislation is passed capital gains will be taxed at a higher rate. However, the House and Ways Committee is currently proposing 7 backdating the proposed tax rate to September 13, 2021.Īll investors who generated long-term capital gains after this effective date would be subject to the higher proposed rate on their 20 tax returns. President Biden is currently proposing 6 backdating the proposed tax rate increase to either April or May 2021. This type of legislation is not uncommon and has been done in the past. You may not be aware Congress has the authority to make a new capital gains tax rate increase retroactive to an earlier dateįor example 5, a bill may be passed into law on October 1, 2021, but the date the new tax rates go into effect could be retroactively dated as far back as January 1, 2021. Click the link to download the guide: Īlthough the new capital gains tax rate remains uncertain, it is becoming less uncertain that the long-term capital gains tax will be increasing in the coming months. In 2022, the higher 28.8% rate will be applied 4 to single taxpayers whose adjusted gross income exceeds $400,000 and $450,000 for taxpayers filing married filing jointly. In 2021, the higher 28.8% long-term capital gains rate will be applied 3 to single taxpayers whose adjusted gross income exceeds $523,601 and $628,301 for taxpayers filing married filing jointly. The House and Ways Committee recently countered 2 the President’s proposed tax rates with lower rates, such as a 28.8% rate (25% long-term capital gains rate + 3.8% Net Investment Income Tax) on Federal long-term capital gains for taxpayers in the highest tax bracket. However, many taxpayers are aware this will likely not come to fruition. There has been a lot of discussions 1 recently about President Biden’s desire to increase the Federal long-term capital gains tax rate from 23.8% (20% long-term capital gains rate + 3.8% Net Investment Income Tax) to the ordinary income tax rate (currently 37% but could increase to 39.6%) for yearly taxable income above $1 million. ![]()
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